Acts of God and real estate closings

September 8, 2017

I signed a contract to purchase a home 30 days ago in Cape Coral, and I planned to pay cash. The inspection period is over and the closing is scheduled for Monday. I see that Hurricane Irma is threatening to hit us over the weekend, and I had not arranged for home insurance yet. They tell me I cannot get insurance until the storm passes. If I close on this Friday, I could have a big problem! The contract has a "Force Majeure" clause, but I am not sure if this allows me to postpone or cancel the contract. What should I do?

- Olivia F.

Olivia,

Purchasing a home in Cape Coral seldom involves a big storm like this, but you have the distinction of being one of those that has a contract during the threat of a major hurricane. I have written before of the importance of the written contract, and understanding your rights and obligations under a variety of circumstances. These circumstances include reasons for postponing or cancellation.

The standard contract used by Realtors contains a "Force Majeure," or "Acts of God" clause. This clause is designed to recognize that circumstances beyond the control of the parties could occur that will make a closing impossible. For instance, if there were no mail services for an extended period, a closing would be postponed appropriately to allow for receipt of the original deed and other documents. In your situation, in a cash deal, nothing has occurred that makes the closing impossible. You do not have a lender that is making funds contingent on insurance, and I assume the seller is ready to close.

At this point, this is where it is wise to consider not just the legal implications, but the practical ones. Your seller likely has homeowners insurance and will continue to have it through the storm. And, it is true it may be difficult, if not impossible, to obtain insurance now. This is where open communication with the sellers can be very beneficial. You can acknowledge the extra cost and inconvenience to the seller by offering to pay for those costs, or allow all or a portion of your escrow deposit to become non-refundable. This show of good faith on your part may go a long way in affirming to the seller that you do want to go forward, but not at the risk of having an uninsured house in the middle of a hurricane.

Of course, if an agreement cannot be reached, and you refuse to close, you may be in breach of contract. The specific wording of your contract will likely dictate how a court would view your reluctance to close. If you cannot reach an agreement, it is advisable to speak with legal counsel before the deadline to close.

I wish you, and all of our Cape Coral friends and neighbors, safety through the storm.

Eric P. Feichthaler has lived in Cape Coral for 28 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continued his service to the community through his chairmanship of the Harney Point Kiwanis Club KidsFest from 2011-2015, which provides a free day of fun and learning to thousands of Cape Coral families, and funds numerous scholarships. He has been married to his wife, Mary, for 14 years, and they have four children together. Recently, he earned his board certification in Real Estate Law from the Florida Bar. He is also a Supreme Court Certified Circuit Civil Mediator.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.